BY TOH KAR INN

More construction jobs: Ongoing projects such as the MRT2 will contribute to the order books of infrastructure constructions players this year.

PETALING JAYA: The construction sector outlook for 2017 seems promising, particularly for infrastructure construction players, given the slew of government projects.

A head of research said ongoing projects like the Mass Rapid Transit 2 (MRT2), Tun Razak Exchange (TRX) and Petronas’ Refinery and Petrochemical Integrated Development (Rapid) project site in Pengerang will largely contribute to the order books of infrastructure construction players for the year.

“Property construction activities are not going to be as buoyant. This is due to the property development cycle, which will continue to be soft this year,” he said.

Apart from ongoing projects, the construction sector holds more upside in light of the RM12.8bil Sabah portion of Pan Borneo Highway as well as the upcoming High Speed Rail (HSR) projects.

According to an Affin Hwang Capital sector report, three packages from the Sabah portion of the Pan Borneo Highway have been awarded, with the remaining packages targeted to be awarded by end-2017.

The award deadline of end-2017 is to ensure the project can be completed by March 2021.

Warisan Tarang-UEM Group-MMC Corp joint venture (JV) company, Borneo Highway PDP Sdn Bhd, was appointed as the project delivery partner (PDP) for the Pan Borneo Highway Sabah project in April 2016.

“Construction contract awards for Pan Borneo Highway Sabah will benefit contractors with established track records and precast concrete product manufacturers in Sabah.

“Potential beneficiaries are Suria Capital Holdings Bhd-Gabungan AQRS Bhd JV and WCT Holdings Bhd, which are bidding for the project,” said Affin Hwang Capital.

In addition, there are more major property development projects planned in Sabah, such as the redevelopment of Kota Kinabalu (KK) Port with an estimated gross development value of over RM5bil.

The redevelopment of KK Port, which includes the Sabah International Convention Centre, comprising One Jesselton, Jesselton Quay, and KK Convention City which are developed by the Suria-Gabungan AQRS JV, SBC Corp Bhd-Suria JV and Mah Sing Group Bhd respectively.

Affin Hwang Capital also reported that Suria planned to acquire 28.9 acres at KK Port for about RM350mil to develop an international cruise terminal as part of the integrated mixed development project.

Currently, SP Setia is developing the RM2.2bil Aeropod project in Tanjung Aru while the state is developing the RM4bil Tanjung Aru Eco Development.

Under the 11th Malaysia Plan 2016-2020, a key focus for Sabah’s development is to invest in infrastructure to improve connectivity within the state and international linkages.

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Besides Pan Borneo Highway Sabah, there is a planned RM311mil Kota Kinabalu Bus Rapid Transit (KK BRT) project.

As part of the Sabah Development Corridor (SDC), there are plans to build a new KK Airport, light rail transit system in KK, new railway lines to connect the north and east coasts of Sabah as well as upgrading of Lahad Datu Airport.

Meanwhile, CIMB Research opined that the KL-Singapore HSR theme remains relevant to rail players, such as Gamuda, IJM Corp and WCT, though the joint tender for the HSR system will only commence in the fourth quarter of this year.

“The decision on who to award the rail system to will be made by end-2018.

“It remains to be seen if the timeline will also cover the civil works tender.

“Apart from a joint tender for cross-border HSR operations, Malaysia will also put up its own tender for a domestic operator to run the domestic service within its borders,” said CIMB Research.

The project time frame set in the bilateral agreement signed recently continues to put 2026 as the targeted completion date.

This suggests an unchanged eight-year construction time frame, assuming that construction of the project commences in 2018.

A majority of 335km of the rail system will be in Malaysia, while 15km will lie in Singapore.

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